EU investigating Apple for anticompetitive e-book pricing

Apple joins five book publishers as the target of a European Union investigation into anticompetitive practices in the e-book market.

The European Commission is looking into alleged illegal agreements restricting competition, according to the BBC. In addition to Apple, the investigation is targeting Hachette Livre, Penguin, Harper Collins, Simon & Schuster, and Verlagsgruppe Georg von Holzbrinck.

Apple entered the e-book business with the launch of its iPad in 2010. Since then, the iBookstore has also become available on the iPhone and iPod touch.

In March of this year, the commission conducted "unannounced inspections" of companies in several European countries to conduct its investigations. The deals made by Apple and book publishers "are to be examined for breaches of EU rules on cartels, the Commission said."

Many of the same companies, including Apple, were targeted in a U.S. lawsuit filed in August, accusing them of illegal price fixing. That class-action suit alleges that Apple facilitated a change in e-book pricing to what is known as the "agency model" because of competition from the Amazon Kindle.

The agency model allows book publishers to set consumer prices for e-books that they publish, and also allows the company serving the content to take a cut of sales. That allows Apple to take a 30 percent share of titles sold on the iBookstore.

That differs from the "wholesale model," where publishers simply suggest a recommended retail price. But with the wholesale model, booksellers are free to set their own prices and offer discounts if they choose.

A similar anticompetitive inquiry was initiated in the U.S. in August of 2010. Connecticut Attorney General Richard Blumenthal, after finding that prices of bestsellers on Amazon's Kindle and Apple's iBooks platforms, expressed concerns that the deals made with book publishers could be anticompetitive.

Connotes for people that read this and are still scratching their heads:
Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")
The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.
Apple didn't like competing with "free" hardware.
Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

Connotes for people that read this and are still scratching their heads:
Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")
The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.
Apple didn't like competing with "free" hardware.
Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

Connotes for people that read this and are still scratching their heads:
Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")
The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.
Apple didn't like competing with "free" hardware.
Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

It's slightly different. Prior to the agency model, Amazon was free to price the books as they like, even at a loss. After the agency model was set, Amazon has to sell the books at the prices that publishers say

Connotes for people that read this and are still scratching their heads:
Amazon was allowing customers to subsidize the cost of their Kindle with cheap eBooks (e.g. if each eBook is $10 cheaper than the paperback equivalent after you buy 10 books the Kindle has "paid for itself")
The publishers didn't like this because the money used to subsidize the Kindle was coming out of their pockets.
Apple didn't like competing with "free" hardware.
Allegedly under Apple's guidance the publishers colluded to change the pricing model to increase prices and screw Amazon over.

And your last point is partially mentioned in the Steve Jobs biography.

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

There was also the feeling that the prices devalued many books which publishers didn't like. It's hard to get someone to buy a $35 hardcover new release when you can get the ebook for $10.

Considering there are no material costs, printing costs, shipping costs, storage costs, costs to rent space on a store shelf, etc., the ebook should cost significantly less. $35 for a hardcover is and always has been royally outrageous. But $14.99 for the Steve Jobs biography on iBooks? Seems like a much fairer price to me.

Still annoys me that many e-books are the same price as paperback books, it's pure profiteering.

At the end of the day e-books do not have to be printed & then shipped, sure you'll still have Apple/Amazon's mark up but then you'd have that at a bookstore. As it's digital delivery Apple/Amazon don't have to have retail stores full of staff that needs to be paid for.

E-books, just like all downloadable content should be cheaper full stop!

While I believe ebook prices should be lower, I also believe the authors need to and should be paid for the time spent writing/researching/being creative. We pay $8-$15 dollars for an album on iTunes, what's wrong with paying the same for a book? I'm sure the author spent the same, if not more time making it as the musician/band did on their album.

While I believe ebook prices should be lower, I also believe the authors need to and should be paid for the time spent writing/researching/being creative. We pay $8-$15 dollars for an album on iTunes, what's wrong with paying the same for a book? I'm sure the author spent the same, if not more time making it as the musician/band did on their album.

I don't mind paying a fair price, and feel that someone should be rewarded for their hard work.

But, let's say that a new book is £8 at a book store, why should it also be £8 on iBooks or the Kindle Store.

What's more I find that digital contect frequently works out more expensive than traditional media as time goes on. DVD's for example after a year or so they drop into the bargain buckets at £2-3 but are still on iTunes for £9-10.

I know that I have the choice to purchase the traditional media and rip it, frequently I do just this.